Contagion

The spread of financial trouble from one market or institution to others.

Contagion describes how a crisis in one country, bank, or asset class can rapidly spill over into others that are linked through trade, lending, or investor sentiment, even when the fundamentals elsewhere are sound. Fear itself can drive contagion, as investors pull money from anything that resembles the troubled asset.

Regulators moved quickly to contain the contagion after one regional bank's failure spooked depositors at others.